Chapter 5 - Business Formation Flashcards
1
Q
What are the 3 business ownership types? (and describe them)
A
Sole proprietorship = owned by one person
Partnerships = owned by more than one
Corporations = owned by shareholders (legal entity)
2
Q
What are the types of partnerships?
A
- General = all partners have right to participate in management
- limited = includes at least one general and one limited (who has limited liability)
- limited-liability = ALL partners are actively involved but have some form of limited liability
3
Q
What is an acquisition?
A
When one firm buys another
4
Q
What is a merger?
A
When two companies agree to become one
5
Q
What is a spin-off divestiture?
A
Setting up a new division. Sell shares to EXISTING shareholders
6
Q
What is a carve-out divestiture?
A
Setting up a separate business (sell shares to OUTSIDE investors)
